Cooney Industrial v. Toyota Motors Sales

• Court: Court of Appeals for the First Circuit
• Decided: February 25, 1999
• Docket: 97-1981
• Status: Published

Opinion

USCA1 Opinion

                 United States Court of Appeals

                     For the First Circuit


No. 97-1981



                 COONEY INDUSTRIAL TRUCKS, INC.,



                      Plaintiff, Appellant,



                                v.



                TOYOTA MOTOR SALES, U.S.A., INC.,



                       Defendant, Appellee.


APPEAL FROM THE UNITED STATES DISTRICT COURT



                FOR THE DISTRICT OF MASSACHUSETTS



           [Hon. Robert E. Keeton, U.S. District Judge]


Before



                      Selya, Circuit Judge,

                                

          Aldrich and Campbell, Senior Circuit Judges.


Thomas S. Francis with whom William M. Clark and Law Offices

of Thomas S. Francis were on brief for appellant.

     William N. Berkowitz with whom Daniel L. Goldberg, David

Yamin, Bingham Dana LLP, and David D. Laufer were on brief for

appellee.


February 25, 1999


ALDRICH, Senior Circuit Judge.  In this action

    Cooney Industrial Trucks, Inc. (CITI) sued Toyota Motor Sales,

    U.S.A., Inc. (Toyota) for breach of contract and unfair

    business practices during the course of a franchise

    relationship.  Following trial and receipt of the jury's

    answers to special questions, one of which, under Mass. G.L.

    ch. 93B, favored CITI, but another of which was that CITI

    suffered no damages, the court ruled for Toyota.  We affirm.

      Since 1970, CITI purchased and resold Toyota

    forklifts pursuant to consecutive dealer agreements, the last

    of which was executed on October 21, 1992.  This agreement

    allowed CITI to sell equipment from other manufacturers but

    required it, by December 31, 1993, to equal or exceed, and

    thereafter maintain, Toyota's national retail market share. 

    When that date arrived, CITI's market share was 7.7%, well

    below Toyota's national market share of just over 15%.

      In early 1994, Toyota removed New Hampshire from

    CITI's Area of Primary Responsibility, a change authorized by

    the dealer agreement, because of CITI's inadequate sales

    performance in that state.  Then, on August 15, 1994, Toyota

    advised CITI that, despite CITI's poor sales performance, it

    was willing to offer a new four-month dealer agreement that

    would include the same sales performance requirements but,

    unlike the 1992 dealer agreement, would not provide for the

    automatic granting of a six-year agreement if CITI met the

    stated market share.  If CITI met those requirements, however,

    Toyota would consider offering another long-term dealer

    agreement.  CITI failed to execute the proposed four-month

    agreement before the previous contract's original end date,

    September 30, 1994, and the franchise relationship terminated,

    after a two-month unilateral extension by Toyota, on November

    30, 1994.

      After deciding to reject Toyota's offer, Mr. Cooney,

    CITI's owner and president, made contact with Mitsubishi

    Caterpillar (Caterpillar), another manufacturer, to discuss

    the possibility of CITI becoming a dealer of Caterpillar

    forklifts.  Caterpillar and CITI ultimately executed a sales

    and service agreement on November 7, 1994.  According to Mr.

    Cooney, he never had an intention to represent Toyota and

    Caterpillar at the same time, and he negotiated this agreement

    in an attempt to mitigate whatever damage CITI would sustain

    as a result of Toyota's actions.

      In fact, CITI's operations under the Caterpillar

    contract were, allegedly, better than with Toyota.  CITI

    requested the court to charge as follows:

      Gains made by the injured party on other

      transactions after the breach are never

      to be deducted from the damages that are

      otherwise recoverable, unless such gains

      could not have been made, had there been

    no breach.  

    Why it wanted the jury to be told of the "unless" portion does

    not appear; it was its position that it did not apply. 

    Thereafter, the court put a special question to the jury, in

    effect applying it:

            The law imposes a duty upon every

       person to take reasonable steps to

       mitigate, or avoid altogether, damages. 

       Under the law, a plaintiff cannot recover

       damages that it has successfully avoided

       through such efforts.

    

                               . . . .

    

       If you find that [CITI] successfully

       mitigated or avoided losses by its

       acquisition and operation of the

       Caterpillar dealership you may not award

       as damages any losses so avoided.

    

    The jury so answered, awarding no damages.

       At a post trial hearing the court spelled out its

    thinking:  CITI had "benefitted rather than sustained any loss

    or harm from accepting a franchise from Caterpillar that

    prohibited CITI from representing at the same time any

    competitor of Caterpillar, including defendant Toyota."  Thus

    the special question was predicated on an implied ruling, or

    conclusion, that CITI fit the "unless" provision because, but

    for Toyota's breach and departure, its presence would have

    prohibited the Caterpillar contract.  The case hangs on the

    correctness of that conclusion.

       We consider first some legal principles.  To begin

    at the beginning, the court was correct in saying that the law

    imposes on a plaintiff the duty to take reasonable steps to

    mitigate   meaning reduce or offset   damage.  However, the

    duty applies only when the defendant's breach created the

    opportunity to take those steps.   If a defendant had agreed

    to pay for plaintiff's personal services and then rejected the

    contract, by freeing plaintiff's time the breach created the

    opportunity to sell his services to someone else, and the

    plaintiff would have the duty to make a reasonable attempt to

    do so.  If, however, plaintiff was a stockbroker, and

    defendant's failure to place orders would not have created an

    opportunity to deal with other customers, defendant's breach

    afforded him nothing; he would have had no duty.  Hence the

    mitigation rule, footnote 1, ante, which we accept.  As the

    Supreme Judicial Court of Massachusetts has said, "[i]t is not

    the policy of our law to award damages which would put a

    plaintiff in a better position than if the defendant had 

    carried out his contract."  Ficara v. Belleau, 331 Mass. 80,

    82, 117 N.E.2d 287, 289 (1954).  Failing to deduct from a

    plaintiff's award those gains he could not have made had the

    defendant not breached would, of course, violate this

    principle.  So we must ask the question:  If there had been no

    breach, could CITI have kept Toyota and, at the same time,

    made the profitable contract with Caterpillar?

       CITI correctly asserts that the Toyota contract had

    not forbidden its dealing with Caterpillar.  Recognizing that

    there were two sides, CITI's brief noted that Caterpillar

    allowed it to carry competing lines, "if certain conditions

    were met."  The conditions were these:

       Dealer [CITI] . . . will not display,

       inventory, demonstrate, or sell

       [competing goods] except (i) by an entity

       separate from Dealer, (ii) under a trade

       name which is different and distinct from

       that of Dealer, (iii) in facilities

       separate and distinguishable from those

       of Dealer, and (iv) by employees other

       than persons who are also employed or

       otherwise furnish personal service to

       Dealer.

    

    In its reply brief CITI is reduced to claiming that these

    conditions could be satisfied by creating a subsidiary

    company:  

       The exception specifically allows CITI,

       through a wholly-owned subsidiary, under

       a different name, in a separate facility,

       and with separate employees to sell

       competitive products.

    We are not told why CITI shortened the actual wording and

    substituted "and with separate employees" for "and (iv) by

    employees other than persons who are also employed by or

    otherwise furnish personal services to Dealer" (emphasis

    added).  We would read the emphasized words to mean that Mr.

    Cooney could not even be an unpaid officer of the subsidiary. 

    A greater difficulty, it is not clear from its quoted sentence

    where CITI would place the subsidiary.  Is Caterpillar to

    contract with CITI, with Toyota to shift to the subsidiary? 

    It is hard to visualize Toyota accepting such an arrangement. 

    Equally, we cannot think that a prosperous company like

    Caterpillar would itself deal with Cooney through some

    isolated, hypothetical subsidiary.  The district court was

    right in holding that CITI contracted with Caterpillar only by

    reason of Toyota's breach and disappearance.  Hence the

    mitigation rule's "unless" clause applies.

       We would suggest, further, that even if Caterpillar,

    as well as Toyota, had no objection to competition, it would

    have been totally impractical for CITI to be a dealer for both

    manufacturers simultaneously.  As we have seen, Toyota had a

    minimum production requirement that CITI was not meeting.  Can

    it be thought that it could have taken on another substantial

    dealership in such circumstances?  Mr. Cooney's statement that

    he had never intended being a dealer for both manufacturers

      simultaneously was more than a thought; it was a recognitionof impossibility.    We can only think of the present lawsuit

    as a flat attempt to make simultaneous, double collections. 

    CITI's unfairness complaint, that it alone bore the risk of

    the Caterpillar operation's not being successful, overlooks

    the fact that if it had been a failure, Toyota's damage

    liability would not have been offset.  What is unfair is CITI

    seeking to have it both ways.

                           Attorneys' Fees

       The concept that a plaintiff who has recovered no

    damages or other relief should receive attorneys' fees is so

    unusual that we need a clear showing to support CITI's

    contention that the legislature was so anxious to pursue

    business wrongdoing that it wished to reward discoverers even

    if they had not been harmed themselves.  This is far too

    substantial a matter to depend on legal argument; we depend on

      elementary language.     Ch. 93B  12A reads, in part, as follows:

            Section 12A.  Any franchisee or motor

       vehicle dealer who suffers any loss of

       money or property, real or personal, as a

       result of [listed acts] may bring an

       action in the superior court for damages

       and equitable relief, including

       injunctive relief.

    

    Plainly this means that a plaintiff must show loss to itself,

    not merely the occurrence of a wrongful act.  Plainly, also,

    such loss is a predicate for attorneys' fees.  Section 12A

    continues:

            If the court finds for the franchisee

       or motor vehicle dealer in any action

       commenced hereunder, that there has been

       a violation of sections three to eleven,

       inclusive, or of any rule or regulation

       issued under paragraph (c) of section

       three, such franchisee or motor vehicle

       dealer shall, in addition to any other

       relief provided for by this section and

     irrespective of the amount, if any,[  ] in

       controversy, be awarded reasonable

       attorneys' fees and costs; . . . . 

       (emphasis added)

    

    Something cannot be "in addition" if there was nothing

    preceding.  Cf. Jet Line Services, Inc. v. American Employers

    Ins. Co., 404 Mass. 706, 718, 537 N.E.2d 107, 115 (1989)

    ("[T]he reference to an award 'in addition to other relief'

    indicates that relief solely in the form of attorneys' fees

    may not be had.").  Any other result would change the whole

    concept of the statute.

       Affirmed.